Analyzing a Turnkey acquisition

[Kevin Drouillard]

Hello All,

I hope everyone is well and doing great in their investments. 

This post is in regards to a turnkey product that I've had under contract for a while and am nearing closing. 

The house is a 4br/3ba. It is in the suburbs of Chicago, in South Holland. The provider/seller and I agreed to a $155k purchase price. It is fully rehabbed, but I'm unsure of the age of the roof. It is supposed to rent to voucher tenants for $2200. Cash flow should be around $500. 

However, the appraisal that was done by their recommended lender says it's worth $143k. The seller doesn't want to sell it to me for that much but has cut off $5k from the asking, totaling $150k purchase price. He doesn't want to give it to me for the $143k because he claims he won't be making much of a profit, which I find hard to believe considering he acquired the house for $40k. Anyway, now I've agreed to still buy the house, considering the potential cash flow and the long-term returns. however, I will need to cover the difference for the down payment, making it a total of $40k down!

Should I continue on or should I leave this deal?